Monthly Archives: September 2019

§5.873 — The Bitcoin event
is a monetary Cambrian Explosion.[1]
Its signature, in certain regards, is diversity. The ‘coin’ – in its new sense
– is a generic term, to reflect this. The multiplicity of ‘coins’ is less a
matter of amounts than of types. The re-minting of the term
responds to an extraordinary proliferation in the species of comparatively
cash-like money.

§5.8731 — Two basic
families of alt-coins are initially distinguishable. The first consists of
schismatic products from the Bitcoin main chain, generated by hard forks, in
cladistic order. Bitcoin Cash (BCH) and Bitcoin SV (BSV) are the relevant
lineages. Both of these coins are among the top ten cryptocurrencies by market
capitalization. The second family, unified only by its contrast to the first,
is far larger and more variegated, consisting of coins without Bitcoin
ancestry. A number of taxonomic approaches to the principled sub-division of
this alt-coin family already exist.[2]

§5.8732 — Within
cryptocurrency circles, alt-coins as such
are profoundly controversial. Among Bitcoin maximalists they are considered a
pestilence.[3] Their
existence is interpreted as a pathological side-effect of Bitcoin’s emergence,
and a distraction from its inevitable ascent to currency monopoly. On the other
side of the ledger, strains of principled currency pluralism undoubtedly exist,
even if heavily outnumbered by more opportunistic varieties of alt-coin
promotion. Even if a plausible argument can be made for monetary natural
monopoly, currency competition is not without a case.

§5.87321 — In respect to
alt-coins, discursive controversy is not a tribunal of special importance. The
market delivers a superior verdict on cryptocurrencies, with commentary – at
most – as an annex. This verdict is currently mixed. The first point of note is
that Bitcoin’s market capitalization considerably exceeds that of all other
cryptocurrencies combined.[4]
In mid-2019 it was almost eight times that of Ethereum (ETH, the second ranked)
and well over thirteen times that of Ripple (XRP, the third). Bitcoin, then, is
evidently not merely one cryptocurrency among others. On the other hand – if
not quite equally – alt-coins are nowhere
close to being nothing. The latter fact
is quite possibly a leading clue. That is to say, there are reasons to suspect,
in regard to alt-coins, that we haven’t
seen anything yet.

[1] The analogy is close enough to function as a technical
description rather than a figure of speech.

[2] The classification of alt-coins initiated by Wikipedia is almost certain to prove influential, and perhaps even decisive. It grounds the most fundamental level of taxonomic order in the variation between types of consensus mechanism. Proof of work cryptocurrencies, the largest phylum (including Bitcoin and its descendents, among many others), is then sub-divided by cost-function language (SHA-256, Ethash, Scrypt, Equihash, CryptoNote, X11, Lyra2, or other).

[3] A stance against alt-coins is implicit within the term Bitcoin
Maximalism. Several essential ingredients of the monetary ideology make this
claim uncontroversial. Bitcoin Maximalism includes at least the following
commitments: (1) Any currency tends towards natural monopoly; (2) Bitcoin, as
the best currency, is especially prone to exhibit this; (3) cluttering a
currency with specialized traits or characteristics has no robust value, and;
(4) inhibiting the ascent of Bitcoin to global monetary supremacy lacks
strategic justification. Other than Bitcoin, there are only ‘shit-coins’ – in
the argot of those most committed to the former’s absolute monetary
sovereignty.

[4] Cryptocurrency price movements are not only notoriously
volatile, they are also highly correlated. On empirical grounds, then, or by
precedent, market capitalization ratios between coins can be expected to
exhibit greater stability than their absolute values. Yet this hypothesis is
not perfectly neutral. Bitcoin maximalists implicitly anticipate an era of
price divergence, produced by a mix of ‘hyperbitcoinization’ and alt-coin
extinction. Neither of these trends was yet evident in late 2019. While no
truly reciprocal expectation is likely – based on assumptions of general alt-coin advance relative to
Bitcoin – it would be surprising if specific alt-coins had no ‘maximalist’
advocates. The prediction of short-term price convergence – to eventual
cross-over – built into such a position is, likewise, currently undemonstrated.

A list of the top hundred coins by market capitalization can be
found here: https://coinmarketcap.com/